It has been previously reported that in February 2019, the National Assembly of South Africa passed a Carbon Tax Bill to “provide for the imposition of a tax on the carbon dioxide (CO2) equivalent of greenhouse gas emissions; and to provide for matters connected therewith”. Most of the country’s electricity and around two-thirds of total energy comes from coal. With this tax, the government hopes to facilitate the transition towards more renewable energy. It also aims for businesses and households to consider and incorporate the price of greenhouse gas emissions in their production, consumption and investment choices. The Carbon Tax will become effective in June 2019.

However, more recently, on the 30th of April 2019, the South African Revenue Service (SARS) published draft rules for collection and administration of the Carbon Tax. The document contains rules, schedules and forms related to registration, licensing, rebates and refunds, calculation of the levy payable, submission of accounts and payments. The Department of Environmental Affairs (DEA) will collect the emissions data to form the carbon tax base, while the SARS will be responsible of tax collection and assessment.  

The draft rules specify the licensing and registration requirements, which apply only to persons who operate emission generation facilities. In order for the rules to be applicable, one must determine first if the carbon tax threshold applies to the emission generation facility, then whether the fossil fuel combustion allowance applies, and whether the person conducts an activity resulting in greenhouse gas emissions at a combined capacity that is equal or superior to the carbon tax threshold. The draft rules explain, among other things, how every licensee should calculate the amount of the environmental levy payable for each tax period in respect of each licensed emissions generation facility of that person.

The rate of the carbon tax on greenhouse gas emissions must be an amount of 120 Rand (USD$8.27) per ton carbon dioxide equivalent of the greenhouse gas emissions of a taxpayer. The rate of tax must be increased by the amount of the consumer price inflation plus 2 per cent for the preceding tax year as determined by Statistics South Africa per year until 31 December 2022.

The Carbon Tax Bill can be accessed through this link.

You can access the draft rules for collection and administration of the Carbon Tax through this link